A divided county Board of Supervisors is moving forward to craft a response to a scathing grand jury report from earlier this year that criticized the county’s handling of CalOptima, the health insurance plan that covers much of the area’s poor and elderly.

A 3-2 board vote adopted a draft response on March 19 to severe criticism the board received in January from the county grand jury, which issued a report titled “CalOptima Burns While Majority of Supervisors Fiddle.”

Both the CalOptima board and the supervisors are required to respond to the report by April 25.

Supervisors created a temporary committee of Supervisor Janet Nguyen and Supervisor Todd Spitzer to further analyze grand jury recommendations that more supervisors be added to the 11-member CalOptima board.

Only Nguyen serves on the board, which oversees about $1.5 billion in state and federal funds, the largest of any county agency.

“We as a board do not accept the criticism that CalOptima is imploding,” said Supervisor Pat Bates, one of a three-member majority that voted to restructure the previous CalOptima board.

Bates said supervisors remade the CalOptima board after prior board members began to leave, although actually it was the other way around. In October 2011, Nguyen, with the backing of lobbyists from the Hospital Association of Southern California, abruptly proposed a major change to the existing CalOptima board.

Nguyen’s ordinance, adopted in December 2011 with the support of Bates and former Supervisor Bill Campbell, caused several existing members to be ineligible for reappointment and in the months that followed, and others, like former Vice Chairman Jim McAleer, quit.

Among other things, McAleer cited micromanaging by Nguyen as interfering with the work of CalOptima staff. In the months after Nguyen took over CalOptima, at least 16 top or key executives, including the CEO, chief operating officer and chief medical officer quick to work for private industry or other government agencies.

In the past, CalOptima had received high marks for providing MediCal and Medicaid coverage to more than 400,000 county residents.

“Something happened at CalOptima, because there was a mass migration,” said Supervisor John Moorlach, who, along with board Chairman Shawn Nelson, voted against Bates’ proposed response to the grand jury.

In its report, the grand jury warned “political turmoil threatens the organization, jeopardizing its membership’s access to quality healthcare and potentially putting the entire entity at risk.”

The grand jury’s term ends in June, and it’s not clear what, if anything, will happen as the result of its findings. The grand jury is supposed to issue two more reports concerning CalOptima before disbanding.

Just before the supervisors began to discuss the grand jury report, Bates distributed a four-page proposed response, providing no time for the public to read it in advance.

Open-government expert Terry Francke, who advises Voice of OC on public access issues, said such actions are legal because the 60-year-old Brown Act, which requires open meetings, doesn’t ensure transparency under all circumstances.

Bates’ proposal cited five grand jury findings and stated that supervisors disagreed “wholly” with most of them.

The first finding declared that a majority of the supervisors “have failed to take an active role in preserving an entity playing a vital role in the healthcare needs of the County’s young, disabled, low income and senior residents.”

That’s not our job, Bates’ response asserted. “By design, the Health Authority Ordinance [which created CalOptima] provides no authority for the Board of Supervisors as a body to participate in the detailed operation and oversight of CalOptima.”

That response applied to another grand jury finding that supervisors failed to act while key CalOptima executives left for other organizations.

The grand jury also asserted that “member organizations have expressed fear of retaliation if they do not support certain causes or candidates and the Board of Supervisors majority has not attempted to curtail or dispel these fears.”

Bates’ draft response stated that “the finding lacks specific information required for further analysis.” The county “takes seriously its obligation to investigate issues of fraud, intimidation” and other laws, the response asserted.

Complaints that result in an investigation — including complaints about the supervisors themselves — are reported to the board’s Audit Oversight Committee, which includes two supervisors, according to the draft. “To date there is no record of any complaints or investigations relating to ‘fear of retaliation reported by member organizations,’” it stated.

The Bates report also “wholly” disagreed with the grand jury that having just one supervisor on the CalOptima board keeps the two county department heads also are on the board from acting independently. The grand jury asserted that “county employees are reluctant to vote against a Supervisor.”

In her draft, Bates declared that it’s common in Orange County and elsewhere to have county employees serve on boards and also to appoint only one supervisor.

In its recommendations, the grand jury urged the supervisors to appoint more than one of its members to the CalOptima board, noting that all five supervisors serve on the financially smaller Orange County Transportation Authority.

After the grand jury report was issued, Nelson, Moorlach and Spitzer said they favored adding more supervisors. But in the past, some supervisors have been reluctant to serve on the CalOptima board. Spitzer and Nguyen will make a recommendation to the supervisors on the issue.

Adding more supervisors “would minimize potential conflict of interest and reduce any opportunity for CalOptima to be used for political gain or to advance personal agendas,” the grand jury declared.

Please contact Tracy Wood directly at twood@voiceofoc.org and follow her on Twitter: twitter.com/tracyVOC.

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